GlobeWe often expect differences among legal approaches to employment relationships around the globe. Do we ever think about the similarities?

In the vast majority of countries through which my legal work life has blazed a trail, there is one concept that is remarkably universal: the definition of employment.

When characterizing what happens in each of the 197 countries that exist today, one can seldom safely use the term “all,” but I will go out on a limb and say that all countries define employment in virtually the same way. Individual statutes often contain specific definitions, but in a nutshell, employment is generically defined as dependent services provided by a person to another person for compensation. The manner of payment, the calculation of wages, even the currency of the compensation does not matter. What matters is whether a person (usually an individual rather than a legal entity) performed work under the direction or control of another person (usually a legal entity, but could also be an individual) and was paid something of value in return for the services.

Sometimes the question is posed as to which legal person holds the role of employer. Sometimes the question is posed as to which of several legal persons might be more responsible for employer obligations than others. Laws defining who is an employee, however, agree that the person performing the dependent service is an employee.

Ok. So… what?

As I have previously discussed in this blog series, having the status of employee entitles individuals in each country to receive specific protections. The country does not often care whether the employer is resident or has a legal presence (although some countries do) so long as the employee has the benefit of the legal protections associated with that country’s law. The definition of employee is therefore not dependent on the location of the employer, it is dependent on the location of the employee. And when dependent relationships cross borders, unforeseen liability often arises.

I receive questions frequently regarding the benefits owed to employees working abroad from the main employer or the company headquarters. The questions often involve whether the employment relationship can remain at-will, whether the employee can be paid in home currency, whether the home benefits plan covers the employee while out of the country. The expectation appears to be that citizenship defines employment status. The only time citizenship relates to employment status is in response to questions of immigration – can the citizen of this country lawfully be employed in that country? In — dare I say it — all countries, citizenship of the employee does not define the application of employment laws.

In the vast majority of situations, the location in which the employee performs the services governs the person’s employment rights. Do laws sometimes follow citizens? Yes. Do contract benefits executed in one location sometimes follow employees to another location? Yes. Yet in neither case can the more generous benefits in the host country be automatically eliminated by the less generous obligations imparted in the home country, absent very special circumstances. It is all about where the employee performs the services. In the employment context, if assumptions are to be made, they should be made in favor of the law of location.